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 Time appears to be running short on Midwest Air Group Inc. as the private equity-backed airline scrambles to secure concessions that will allow it to avoid a Chapter 11 filing.
Oak Creek, Wis.-based Midwest, which last month sent a memo to employees saying drastic cuts were needed to survive sky-high fuel prices, according to union sources, has set a deadline of Friday to reach new deals with its unionized pilots and flight attendants. CEO Tim Hoeksema, who orchestrated his airline's $450 million sale to a consortium led by TPG Capital last summer to fend off a hostile bid by rival AirTran Holdings Inc., told workers the airline needed to scale back its fleet and become a smaller, more focused carrier. To that end, Midwest is hoping to secure reductions in union pay rates that were set based on comparisons to national carriers to rates benchmarked to smaller commuter airlines where workers typically make less. Union sources say the effect is drastic. Midwest according to these sources intends to eliminate half of its 400 pilot positions, with nearly 100 current captains being relegated to lower-paid first-officer status. Factoring in the new wages, these demoted first officers could see their pay drop by more than half. It is far from certain that the airline will be able to secure the cuts it says it needs prior to its deadline, and it is unclear whether missing that deadline would lead to an immediate Chapter 11 filing or is just a negotiating tactic. Should Midwest file, TPG would face the difficult choice of committing new funds for a reorganization or simply cutting its losses and moving on. - Lou Whiteman See TheDeal.com story on Midwest's difficulties CategoriesComments
From: RJ,
Midwest/TPG/NWA is basically asking it represented employees to take further reductions from already concessionary bargained contracts. Emloyees funding tickets? Thats what they are asking. For the management of this company to repeatedly make poor decisions that have affected the employees for 10+ years, has to stop and now. Remove the problems, then try to fix the overall machine. The work groups have done all that they can to try and help, fuel savings, weight reductions, etc. Now to take wage cuts that will be reflective of a regional airline? Put the number of seats on your aircraft that they were manufactured for. Poor decision after poor decision with management not being held accountable NEEDS TO CHANGE. Oust the problems and start anew!
Posted on:
July 11, 2008 1:34 PM
From: Sack,
What kind of Management comes to it's employees and says, " We need to cut your wages %75 to survive", and then calls it A mismanaged airline. Fair & Equitable should be replaced by what is reasonable. In 2003, this management team got the unions to take a concessionary pay cut worth millions. What happened? The CEO has agreed to take a 40% pay cut on his yearly salary, IF the unions agree for the 75% cut. If you are a CEO and you want to be an example to those you lead, should you not "lead" and take a paycut before everyone else, not dependent upon what your employees do..? The problem here at Midwest is that we've had years and years of MisManagement. TPG needs to realize that and just get on with it. Restructure and create something worth keeping, or throw in the towel. I'm starting to think TPG is not as smart as their resume dictates. We in the airline business have gone through this stuff before.
Posted on:
July 11, 2008 1:51 PM
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Midwest Air Group, has been mismanaged for years. The pilots collectively have stated this for years now. TPG has publicly stated that it has confidence in the current management. How they determined this, is beyond me, as they seem to have studied this airline from afar and don't know or have ignored the previous blunders this management group has made. Representatives from TPG have not directly overseen the operation nor changed any management structure. I know if I purchased a company for $450mil. I would have a small team go in and observe. From my perspective, the principles {TPG/NWA} want bankruptcy for some reason. Which makes me wonder: what kind of genius buys Midwest for $450 million and a few months later, declares bankruptcy or liquidates?